The Foxquilt Guide to Regulated Markets: Building and Scaling Across US-Canada Borders

Building a regulated product in one market is challenging enough. Building one that works across both the U.S. and Canada requires an entirely different level of expertise. In a recent episode of Category Visionaries, co-founding partner Mark Morissette revealed how Foxquilt navigated this complex regulatory landscape to create a truly cross-border insurance platform.

Starting with the Less Regulated Market

Foxquilt strategically chose to begin in Canada, where commercial insurance regulations are less complex. “Canada is a wonderful, lucrative property casualty insurance market. It’s a bit different. It’s not regulated in the same sense as the US when it comes to commercial lines, general liability, and so you’re not filing product across different provinces,” Mark explains.

Building for Cross-Border Scale

From day one, Foxquilt built their platform with cross-border capabilities in mind. “We always build software product for a ubiquitous north american marketplace. And when you do that, then you have a very scalable offering because you can parachute it in any market thereafter,” Mark notes.

Navigating U.S. Regulatory Complexity

The U.S. market presented a unique challenge with its state-by-state regulation. “50 different states have 50 different regulatory environments. And then we got ten provinces of Canada,” Mark points out. This complexity extends to every aspect of operations: “Every state down to the font size is very different. So think about how complex, sophisticated and intelligent your machine has to be.”

Building the Right Team

Success in regulated markets required deep industry expertise. “If you look at our cross, our broad leadership team, we all have a underwriting and PNC background. Even our heads of sales have underwriting backgrounds,” Mark shares. This expertise was crucial for building compliant products across jurisdictions.

Securing Regulatory Support

Getting regulatory approval required careful relationship building. “In 2018 we had to set out to court the big reinsurers that would give us the autonomy and authority to get over these kind of building out that infrastructure and getting above and beyond the regulatory hurdles because we file our own products,” Mark explains.

Managing Product Complexity

The regulatory requirements affected every aspect of their product. As Mark notes, “It’s not just about you’re filing product actuarily and so forth and underwriting guidelines so forth, but you’re also servicing that customer and the lifecycle, that policy, not just as you’re onboarded as a net new policy. It’s about changing and endorsing that policy.”

Creating Competitive Advantages

This regulatory complexity actually created opportunities. “This is one of the largest trading partnerships in the world, US and Canada and SME businesses and mid market businesses trading back and forth. No legacy carrier has created a cross border vehicle, facility or product to support that trade,” Mark points out.

Key Lessons for Founders

Foxquilt’s experience offers several important insights for founders building regulated products:

1. Start in less regulated markets to perfect your product
2. Build your technology stack with multi-jurisdiction capabilities from day one
3. Assemble a team with deep regulatory expertise
4. View regulatory complexity as a potential competitive advantage
5. Invest in relationships with regulatory stakeholders

For founders building regulated products, Foxquilt’s journey shows that success often comes from embracing regulatory complexity rather than trying to work around it. Their story suggests that sometimes the biggest opportunities lie in solving the hardest regulatory challenges – the ones that legacy players have avoided tackling.

By maintaining control over their technology stack and investing in regulatory expertise, they’ve been able to create solutions that legacy carriers can’t easily replicate. For founders considering similar challenges, their experience shows that while building compliant products across multiple jurisdictions is complex, it can create sustainable competitive advantages that are difficult for competitors to overcome.